A Hong Kong-listed company has announced a 1.2 billion US dollar bid for two fledgling Australian iron ore miners, which could make it a significant new player in the lucrative industry.
Wah Nam International Holdings Thursday said it would make takeover offers through its wholly-owned Australian subsidiary for all the shares in Brockman Resources and FerrAus that it does not already own.
Combining the west Australian iron ore juniors could create the fourth largest player in the resource-rich Pilbara region, dominated by BHP Billiton, Rio Tinto and Fortescue assets, observers told The Sydney Morning Herald.
The all-scrip bid will offer 30 Wah Nam shares for every Brockman share and six Wah Nam shares for every FerrAus share — valuing the Australian companies at about 932 million dollars and 230 million dollars respectively, it said.
Wah Nam, a limited liability company incorporated in Bermuda and listed on the Hong Kong Stock Exchange, already owns about 23 percent of Brockman and some 20 percent of FerrAus.
Brockman and FerrAus have said they will consider the offer, which comes as iron ore, a vital ingredient in steel-making, is in strong demand from rapidly industrialising China.
FerrAus executive director Bryan Oliver said the offer, which triggered share price rises of more than 25 percent in both companies, was complex and difficult to evaluate.
"You not only have to evaluate what the directors think FerrAus is worth but you need to work out what is the value of the scrip being offered," he told the Herald.
"Everyone prefers cash, cash is tangible and touchable. But the board will assess this from a value-for-value point of view."
The takeover play, which analysts said could spur consolidation among other iron ore juniors, will require major investment on rail infrastructure in the sparsely populated Pilbara if the iron ore is to get to port, the report said.
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